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Does The Data Make Funcom SE (OB:FUNCOM) An Attractive Investment?

Simply Wall St

Attractive stocks have exceptional fundamentals. In the case of Funcom SE (OB:FUNCOM), there's is a financially-robust company with a strong history and an optimistic growth outlook. Below is a brief commentary on these key aspects. If you're interested in understanding beyond my broad commentary, take a look at the report on Funcom here.

Flawless balance sheet with high growth potential

One reason why investors are attracted to FUNCOM is its notable earnings growth potential in the near future of 72%. Earnings growth is paired with an eye-catching top-line trajectory of 72%, which indicates a high-quality bottom-line expansion, as opposed to those driven simple by unsustainable cost-cutting activities. Over the past few years, FUNCOM has more than doubled its earnings, with its most recent figure exceeding its annual average over the past five years. Not only did FUNCOM outperformed its past performance, its growth also surpassed the Entertainment industry expansion, which generated a 33% earnings growth. This is an optimistic signal for the future.

OB:FUNCOM Past and Future Earnings, September 1st 2019

FUNCOM's strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This implies that FUNCOM manages its cash and cost levels well, which is a key determinant of the company’s health. Looking at FUNCOM's capital structure, the company has no debt on its balance sheet. This means it is running its business only on equity capital funding, which is typically normal for a small-cap company. Therefore the company has plenty of headroom to grow, and the ability to raise debt should it need to in the future.

OB:FUNCOM Historical Debt, September 1st 2019

Next Steps:

For Funcom, I've put together three essential factors you should further examine:

  1. Valuation: What is FUNCOM worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether FUNCOM is currently mispriced by the market.
  2. Dividend Income vs Capital Gains: Does FUNCOM return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from FUNCOM as an investment.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of FUNCOM? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.